Correlation Between Clave Indices and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both Clave Indices and Metalurgica Gerdau at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Clave Indices and Metalurgica Gerdau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clave Indices De and Metalurgica Gerdau SA, you can compare the effects of market volatilities on Clave Indices and Metalurgica Gerdau and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Clave Indices with a short position of Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clave Indices and Metalurgica Gerdau.
Diversification Opportunities for Clave Indices and Metalurgica Gerdau
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Clave and Metalurgica is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Clave Indices De and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau and Clave Indices is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Clave Indices De are associated (or correlated) with Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of Clave Indices i.e., Clave Indices and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between Clave Indices and Metalurgica Gerdau
Assuming the 90 days trading horizon Clave Indices De is expected to under-perform the Metalurgica Gerdau. But the stock apears to be less risky and, when comparing its historical volatility, Clave Indices De is 2.01 times less risky than Metalurgica Gerdau. The stock trades about -0.02 of its potential returns per unit of risk. The Metalurgica Gerdau SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,066 in Metalurgica Gerdau SA on August 26, 2024 and sell it today you would earn a total of 30.00 from holding Metalurgica Gerdau SA or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clave Indices De vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| Clave Indices De |
| Metalurgica Gerdau |
Clave Indices and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clave Indices and Metalurgica Gerdau
The main advantage of trading using opposite Clave Indices and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clave Indices position performs unexpectedly, Metalurgica Gerdau can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.| Clave Indices vs. Taiwan Semiconductor Manufacturing | Clave Indices vs. Fras le SA | Clave Indices vs. BTG Pactual Logstica | Clave Indices vs. Telefonaktiebolaget LM Ericsson |
| Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Fras le SA | Metalurgica Gerdau vs. Clave Indices De | Metalurgica Gerdau vs. BTG Pactual Logstica |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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